Ethereum’s “London” hard fork has just taken place, and it is a substantial shift. Transaction fees are being recalculated to decrease their volatility. In addition, the update laid the scene for a significant shift in the ethereum network that may render mining more unimportant.
The new and improved functionality has so far happened to correspond with an increase in the price of ether, the currency of the ethereum blockchain. Cryptocurrency is up 3.9% over the past 24 hours, trading at $2,620.
Many are excited because the update implies that many important improvements are coming to the underlying code that underlies the world’s second-largest cryptocurrency.
Ethereum’s Gas Fee Problem
Ever since Ethereum was created, it has been hard for its users to deal with gas fees along with the carbon footprint of Ethereum’s proof of work mining. In the cryptocurrency space, the blockchain has a well-documented scalability issue, and its expensive and sometimes erratic transaction fees may frustrate even its greatest supporters.
In the last few months, interest in nonfungible tokens (NFTs) has significantly increased, along with an uptick in the realm of decentralized finance, commonly known as DeFi.
This Thursday’s code updates are intended to help improve the platform’s current problems by eradicating or “burning” ether currencies and shifting transaction costs to be more predictable.
Like a motorway, the city of London is adding lanes to help lower traffic congestion and is also implementing toll pricing.
Currently, on average, the network burns up 3.68 ETH ($10,295) per minute. Another benefit is that EIP 1559 implemented a base fee, which is destroyed in each block, instead than going to miners.
This allows the network to keep up with Ethereum’s inflation while maintaining providing block rewards and priority fees to miners.
Ethereum Switches from Mining to Proof of Stake
This upgrade is one of the steps needed to be taken before Ethereum fully shifts away from mining “proof of work” to proof of stake validation. The creator of Ethereum, Vitalik Buterin, has long envisioned a shift towards proof of stake. This vision is finally taking form with Ethereum 2.0 upgrades, such as the London hard fork.
There are many obstacles in switching from proof of work to proof of stake. To develop and test the proof of stake engine, the engineers on the project are also working on a parallel version of the current system that still uses proof of work. This section is now coming live.
The proof of stake engine will be running while problems are fixed for some time after the network comes up. Once the problems are resolved, the community will presumably reach an agreement and establish a deadline for the switch.
Ether holders will not be impacted, only platform users will see changes. According to the Ethereum Foundation, the carbon footprint of the network will decrease by 99.99 percent when that time arrives.